Kohl’s to Lay-Off 1,500 Employees; Close Some Stores

| published March 22, 2016 |

By Keith H. Roberts, Thursday Review contributor

The department store chain Kohl’s, facing a sharp drop in profits after several consecutive periods of profit loss, announced this week that it will lay off roughly 1500 employees and close at least 18 of its retail stores.

Kohl’s is facing pressure from investors to downsize in the face of it poor fourth quarter numbers, which show that the retailer saw profits fall by 20% between October-December of 2015. It was one of several bad quarters for the department store, which specializes in men’s and women’s clothing and shoes, among other items.

Management said that most employees will receive what it calls a “competitive severance,” as well a brief period of extended benefits. It also stressed that employees will be given every opportunity—where geography allows—to transfer or be rehired at stores which the chain plans to keep open. According to the company, those stores being shuttered represent only about one percent of all Kohl’s sales.

Kohl’s said it must cut spending and costs by at least 45% within the next few months in order to remain solvent and to avoid the risk of deeper financial troubles. Kohl’s officials say that the 18 stores being shuttered are underperforming in all areas of products and sales. Half of the stores on the chopping block are located in California; the others are spread out across Florida, Georgia, Wisconsin, Illinois and New Jersey. Florida will lose two stores, Georgia will lose three.

Kohl’s announcement comes as other major retailers are also downsizing and closing locations nationwide. Sears and Kmart—owned by the same company—are in the process of closing hundreds of locations nationwide. In January, the iconic Macy’s retail chain announced that it must immediately close some 36 stores and lay off 3,000 employees, including 165 managers and executives. Later that same month, Wal-Mart—the world’s largest retailer—announced the closure of 269 stores and a workforce reduction of more than 16,000.

And only weeks ago, the newly-merged clothing giant Men’s Wearhouse/Jos. A. Bank announced the closure of some 250 or more retail locations this year, including an additional shuttering of about 60 of its formalwear stores in a dozen states. Parent company Tailored Brands has faced an uphill struggle since the 2014 merger was complete.

Kohl’s, like many brick and mortar retailers, has faced extreme difficulty in the past few years competing with clothing sales online. Kohl’s was slow to react to the changes in customer preferences and spending patterns, some one third of which have shifted to web-based sales. Kohl’s 20% fourth quarter profit loss in is keeping with similar losses faced by JC Penney, Macy’s and dozens of other retailers late to the sea change in American spending, which has all but killed both Sears and Kmart, and which drove the ancient A&P grocery chain to enter what will likely be its final bankruptcy. Wal-Mart saw a 15% drop in its holiday sales in 2015, the biggest slippage since the start of the Great Recession in 2008.

Kohl’s said it will complete the current round of store closures by mid-June on this year.